Merrill Lynch and Goldman Sachs on Hanson. Oh, dear!

Monday, 30 April was proving a sickly day for Hanson (I had about 1% of my portfolio in Hanson, bought on the strength of their reserves of building aggregates). Its share price was down about 3% that morning at £8.30. Merrill Lynch had released a broker note and downgraded Hanson to sell from hold. The note stated that fair value is 614p and 842p on the basis of a takeover. The broker saw little prospect of M and A:

‘High recent takeover multiples and a weakening US housing market should lead to a much calmer period of US takeover activity in our view. ............
Hanson’s share price includes significant takeover premium despite no signs of a takeover. We do not expect a bid in the short term.’

614p? Gosh, I'd bought mine at 830p in late March. Your not-too-boastful-I-hope blogger did not bat an eyelid. Three days later guess what happened: news that a large European company, Heidelberg Cement, was considering making an offer. Whooooooooooooooooooosh. Price by end of trading on Friday: 1070.5p.

End of story? Not quite. Goldman Sachs had had Hanson on its Conviction Sell list! Now after the approach from it changed its recommendation to neutral. It admitted that the shares had gone up by more than a quarter since it formed its bearish opinion.

And to think somebody pays big bucks to these pillocks for this stuff. Ughh.